Why we now need a United States of Europe

European Justice Commissioner Viviane Reding makes a case for a United States of Europe as a means of finding a way out of the current debt and financial crises.

26.11.2012

By Viviane Reding

To find its way out of the current debt and financial crises, the European Union should start moving towards a United States of Europe. This is the way to greater democracy and a model of government that draws the right lessons from the errors of the past.

“A day will come when your arms will fall from your hands! A day will come when war will seem as absurd between Paris and London, between Petersburg and Berlin, between Vienna and Turin, as it would seem absurd today between Rouen and Amiens, between Boston and Philadelphia. A day will come when you France, you Russia, you Italy, you England, you Germany, all of you, nations of the continent, will, without losing your distinct qualities and your glorious individuality, merge in a close and higher unity ...”

This vision of a United States of Europe was articulated by the French author Victor Hugo back in the mid-nineteenth century. At that point bloody conflicts still lay ahead for this part of the world, conflicts that would bring the most brutal devastation to Europe twice within 20 years. And yet we Europeans have created something extraordinary, something we too rarely feel proud of: today, 500 million people live in the European Union in peace and freedom. Over 315 million people share the euro as their currency.

With all the crises in the news, one might well think that Europe was in a bad way. It is true that a number of EU Member States have major problems. However, the many nightmare scenarios of disintegration prophesied for the euro-zone over recent months have not been fulfilled. And they will not be.

Now it is time to decide on the right way forward. To solve problems successfully, we also need to properly analyse their causes.

When the European monetary union was born in Maastricht in 1991, an independent European Central Bank was created - but no European economic government. There was no single European finance minister to flank the powerful ECB President, but 17 national finance ministers.

There is a common European currency, but no substantial common European budget that can be used efficiently to achieve economic policy goals. For months now Europe has been engaged in dramatic debates about whether to use 1 per cent or 1.05 percent of the EU’s gross domestic product as a common fund in the form of the EU budget - and then we are surprised that we Europeans face more problems than the USA when we want to boost our economic growth. In the USA, Washington has a Federal budget of around 35% of the country’s gross domestic product.

If we want a budget policy that is sound in the long term and also a force for solidarity, we need a European finance minister who is answerable to the European Parliament and has clear powers of intervention in relation to the Member States. We also need a European budget with the wherewithal to shape a real growth policy in the interest of all Europeans.

A lot has been done over the last three years to stabilise the monetary union. The new European Stability Mechanism (ESM), which can mobilise up to 500 billion euro, is a historic achievement, as is the European Fiscal Compact, under which 25 Member States have made credible commitments to maintain sound public finances and apply national “debt brakes". The action taken by the European Central Bank to maintain the stability of the euro is also of inestimable importance. All these measures to curb the crisis are important. They can buy time, but they are no substitute for sustainable stabilisation of the fragile structure built up on the basis of Maastricht.

What we need is to radically deepen the political and democratic foundations of the European Union. In the heat of the crisis, both the Fiscal Compact and the European Stability Mechanism had to be set up outside the framework of the European Treaties.

But from a democratic and parliamentary point of view, this cannot and must not be a long-term solution. Decisions must not be left exclusively to “troikas” of independent financial experts! On the contrary, I believe that debates about which requirements should and should not be imposed must be conducted in full view of the public in the European Parliament.

At the beginning of this year, German Chancellor Angela Merkel called for the European Commission to become a European government. I believe that this conceptual shift is right, indeed overdue. I myself have already been elected to the European Parliament five times in a row by the citizens of Luxembourg, and I would like to see the prior election of Commission members to the European Parliament become the rule rather than the exception in future. The 2014 European elections will be the next opportunity to vote on these changes.

As in the USA, we will need a two-chamber system for the United States of Europe. Perhaps one day in the future we will need a directly elected President of the European Commission, something which the German Finance Minister Wolfgang Schäuble has already proposed and which the European People’s Party has recently included in its manifesto.

The Presidential election campaign in the USA has shown us what a mobilising effect such a decision about a single person can have for a whole continent. True, this requires politicians to be ready and able to engage in direct dialogue with ordinary citizens, even in a town hall in deepest Ohio. In Europe however, probably only candidates who speak several languages will have a chance in such a direct election campaign.

Of course, we cannot create the United States of Europe overnight. To do so we shall certainly need new treaties, and Germany will probably also need to amend its Basic Law. We shall have to find out whether all Member States, or only the euro-zone countries, want to embark on the venture of a Federal Europe.

A key factor here will be the position adopted by the United Kingdom. In their book This Time is Different, the economists Kenneth Rogoff and Carmen Reinhart predict, on the basis of a detailed analysis of the financial crises of the last eight centuries, that “the pressure of the crisis may unleash a dynamism that we cannot imagine in our wildest dreams. In the end the United States of Europe may come about much faster than most people think.”

Viviane Reding, 61, from Luxembourg, is a Vice-President of the European Commission and Commissioner for Justice and Fundamental Rights.